U. S. To Check If Farmer Income Too High For Subsidy

The government will check U. S. tax forms so it doesn’t pay crop subsidies to ineligible rich Americans, the administration said March 19.

“The goal is to limit excessive payments while providing for fairness to family farmers,” said Treasury Secretary Tim Geithner in a statement.

President Barack Obama has pledged to close farm-program loopholes that favour big operators and to focus benefits on family farms. To achieve the goal, he has proposed steps such as a $250,000-a-year limit on payments.

The 2008 law tells USDA to check income tax forms as part of verifying eligibility for farm subsidies. USDA said it will require farmers to sign a form allowing it to check their tax reports.

USDA has no estimate of savings from the step, which applies to this year’s crops and succeeding crops. Crop and dairy subsidies are projected for $6.8 billion this year.

Congressional auditors reported last fall the Agriculture Department paid $49 million from 2003-06 to 2,702 people who apparently earned too much money to qualify for crop supports. There were 1.8 million subsidy recipients during that period.

As many as 23,506 people could be ineligible under the lower-income cut-offs set by the 2008 law, said the auditors.

People with more than $500,000 adjusted gross income (AGI) from off the farm are barred from crop subsidies under the 2008 law. Those with more than $750,000 AGI from agricultural sources are ineligible for the direct payment subsidy but get price supports and counter-cyclical payments.

The 2008 law is the first to bar payments to the wealthiest Americans. Previous limits had exceptions for people who got the bulk of their money from farm, ranch and forestry.

On Dec. 29, USDA said in an interim regulation farmers annually must provide a certificate that they do not exceed the income limit, “the relevant Internal Revenue Service documents and supporting financial data as requested” and authorization for USDA to obtain tax data from IRS.

USDA is expected to decide later this year whether to change its definition of who is a farmer and thus can collect subsidies. Reformers say stricter rules would curtail payments to absentee investors and make it harder to evade payment limits through “paper” reorganizations of big operations.

Besides lower-income limits, the 2008 law requires payments be tracked to individuals and it ended the practice of collecting subsidies indirectly.

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